Financially Sound Keystone
ANDY ANDREWS
Lancaster Fanning Staff
WILLOW STREET (Lancaster
Co.) A good barometer of a
bank’s financial condition is its
capital position. If so, then a capi
tal position of 13.64 percent (what
Keystone Farm Credit, ACA
maintains) signifies a sound finan
cial condition, according to Ber
nard C. Flory, president and chief
executive officer of the
association.
Flory spoke to more than 400
Keystone Farm Credit stockhol
ders at a banquet Tuesday night
Three meetings were held through
out the region this week to update
the stockholders on the financial
condition of the association in
1990 and to elect directors and
nominating committee members
for the upcoming year.
Net income for 1990 was $1.059
million, compared to $1,478 mil
lion in 1989, said Flory. The rea
sons for the slight decrease in over
all income, said Flory, were due to
“some extraordinary items that took place in
1989 which did not occur in 1990.
“From the net operating standpoint, the
income was a truer picture this past year than
it was in the previous year,” he said.
Expenses decreased
During 1990, the overall operating
expenses were decreased by $82,000 from the
previous year. According to Flory, since the
merger, the company “did not promise we
would reduce expenses but we did say we
would try to contain them. 1 think again,
working very closely with the board and the
staff of the association, they look at these
things very hard and did reduce the overall
operating budget”
Of major interest to Keystone Farm Credit
is the capital position, which is more than 13
percent, down from 15 percent in 1989.
Also, in 1989, the board of directors
decided to reduce the overall investment of
the membership. At that time, said Flory, the
board decided to have a five-year plan to
reduce the stock requirement from 5 percent
down to 2 percent or a $l,OOO maximum.
In 1990, the company refunded $3.3 mil
lion in excess stock. Also, during the past
year, the association paid a 5 percent dividend
on the excess stock.
7 percent capital
Flory said the Farm Credit Association
(FCA) has established the minimum standard
capital of system entities at 7 percent, and the
Farm Credit Bank of Balitmore has estab
lished 7.2 S percent as minimum to maintain
funding relationship with the bank.
“With us being at 13 percent, we intend to
continue with our stock reduction plan," he
said.
“We anticipate moderate to modest
growth,” said Flory. “And we feel that our
capital ratio will not deterioriate below 10
percent.”
The association’s real estate
delinquency is 2.4 percent (com
mercial real estate), 3.6 percent
(rural home real estate), and com
mercial loan deliquency is 4.8
percent
Worked on loans
Rory said that, during 1990,
“the staff and management work
ed very diligently on some of the
problem loans.” The bad loans
have been identified and are being
worked on.
“Other problems we’re going to
have are the regulations,” he said.
“One of the situations that we
have is going to cost the associa
tion some money is the appraisal
function. This is something that
the commercial banks have done
in certain cases they’ve gone to
outside appraisers.”
The association is required to
utilize certified appraisers effec
tive Jan. 1,1992. Rory said, as an
example, in the St. Paul district, 75
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appraisers cost the association rep
resenting the district $3 million.
To defray costs, Keystone Farm
Credit, said Rory, will be training
their own staff internally for
appraising.
Will be change
“But it will be a change,” he
said to the stockholders. “You
may feel that now you’re seeing
two people come out to your farm
as opposed to one in the past. This
is not something that we created
locally. This is a federal regula
tion, so we will adhere to that. But
again, changes are inevitable.”
Despite the problems the S&Ls
have had and some of the difficul
ties of the commercial banks,
Rory said, “Let me assure you
that your association is sound
financially,” said Rory.
Three new directors were
appointed as a result of the meet
ings. Harold A. Knechel, Mont
gomery Co., has been farming for
Elects Directors
38 years. He and two sons have a
100-head heifer/dry cow dairy
operation, and they also raise 300
acres of com and 100 acres of
alfalfa and clover.
Paul L. Kreider, Lebanon Co.,
has been fanning for 23 years. In
partnership with a brother, the
operation consists of dairy, beef,
and cash grain. They farm 750
acres, and have 90 cows and 130
young stock.
Kenneth L. Schlegel, Berks Co.,
has been fanning for 27 years. A
partner in Ker-Min Farms, the
operation consists of dairying and
general crops. Schlegel is chair
man of the Baltimore Advisory
and Legislative Council and chair
man of the Keystone Farm Credit
board.
In addition, IS new Nominating
Committee members were elected,
but this information was not avail
able as of presstime.
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Call Shirley at 1-800-654-8838
MEMBERSHIP
MEANS MORE
Pairylea
Cooperative Inc.O
P.O. Box 4844, Syracuse, NY 13221
Bernard C. Flory, president
and chief executive officer of
Keystone Farm Credit, ACA,
spoke Tuesday night at the
stockholders meeting.